Do people plan? |
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Authors: | John Bone John D Hey John Suckling |
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Institution: | (1) Department of Economics and Related Studies, University of York, Heslington, York, YO10 5DD, UK;(2) LUISS, Rome, Italy |
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Abstract: | We report the results of an experimental investigation of a key axiom of economic theories of dynamic decision making—namely,
that agents plan. Inferences from previous investigations have been confounded with issues concerning the preference functionals
of the agents. Here, we present an innovative experimental design which is driven purely by dominance: if preferences satisfy
dominance, we can infer whether subjects are planning or not. We implement three sets of experiments: the first two (the Individual
Treatments) in which the same player takes decisions both in the present and the future; and the third (the Pairs Treatment)
in which different players take decisions at different times. The two Individual treatments differed in that, in one, the
subjects played sequentially, while, in the other, the subjects had to pre-commit to their future move. In all contexts, according
to economic theory, the players in the present should anticipate the decision of the player in the future. We find that over
half the participants in all three experimental treatments do not appear to be planning ahead; moreover, their ability to
plan ahead does not improve with experience, except possibly when we force subjects to pre-commit to their future decision.
These findings identify an important lacuna in economic theories, both for individual behaviour and for behaviour in games.
Electronic Supplementary Material The online version of this article () contains supplementary material, which is available to authorized users.
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Keywords: | Planning Backward induction Dominance Strategies |
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